Tag: dollar

Spot gold rose 0.4 percent to $1,290.84 per ounce as at 0310 GMT, heading for a fourth straight weekly gain. U.S. gold futures were up 0.3 percent at $1,290.8 per ounce. “The weaker dollar and a more dovish Fed are the two most alluring factors for gold,” said Stephen Innes, APAC trading head at OANDA. “The (gold) market is holding back a little as they are concerned the equity market could rally significantly on trade war truce,” Innes said. Palladium 0.4 percent to $1,326.75 per ounce, and was

Gold prices climbed on Friday as the dollar fell back on expectations the U.S. central bank may pause interest rates hikes if the U.S. economy slows this year, while investors awaited news on progress in the Sino-U.S. trade talks.

Spot gold rose 0.4 percent to $1,290.84 per ounce as at 0310 GMT, heading for a fourth straight weekly gain. The yellow metal is up 0.4 percent so far this week.

U.S. gold futures were up 0.3 percent at $1,290.8 per ounce.

“The weaker dollar and a more dovish Fed are the two most alluring factors for gold,” said Stephen Innes, APAC trading head at OANDA.

“There are concerns for the U.S. economy to slow down, perhaps towards the end of 2019 and into 2020, so the markets are pricing rate cuts.”

The dollar slipped against other major currencies, after having rebounded from three-month lows on Thursday following Federal Reserve Chairman Jerome Powell’s comment which suggested the central bank is not done tightening monetary policy just yet.

A partial U.S. government shutdown extended into its 20th day and provided little comfort to the U.S. currency, after President Donald Trump threatened on Thursday to use emergency powers to bypass U.S. Congress to pay for a wall on the U.S.-Mexico border.

“The (gold) market is holding back a little as they are concerned the equity market could rally significantly on trade war truce,” Innes said.

Asian equities inched up to one-month highs, but the rally’s momentum slowed partly as investors sought more clarity on whether the United States and China could make headways on their talks on trade as well as intellectual property rights.

“Once trade issues are resolved, the dollar is likely to remain suppressed, losing its appeal as a safe haven…Gold on the other hand would stand to benefit.”

Also aiding gold’s upward trend are concerns of weakening global growth, further emphasized by somber data out of Switzerland and France on Thursday.

“Gold will likely approach the short term resistance of $1,310 per ounce, from where some profit-booking can be seen,” said Religare Broking’s Sachdeva, adding that near term support can be seen at $1,275 per ounce.

Spot gold is expected to retest a resistance at $1,299 per ounce, with a good chance of breaking above this level and rising further to $1,311, according to Reuters technical analyst Wang Tao.

Palladium 0.4 percent to $1,326.75 per ounce, and was up about 2 percent for the week.

Silver climbed 0.6 percent to $15.65. However, it was poised to snap three sessions of weekly gains.

Fed Chairman Jerome Powell reiterated on Thursday the U.S. central bank has the ability to be patient on monetary policy given that inflation remains stable. Fed Vice Chair Richard Clarida also struck a dovish tone, underscoring the central bank’s willingness to remain patient on the issue of raising rates. “The Fed Funds Rate is no longer accommodative but neutral, and more importantly, positive in real terms. In line with a more patient Fed, the U.S. dollar’ rise will become gentler,” said Phi

The dollar fell versus its major peers on Friday, as investors grew increasingly confident that the U.S. Federal Reserve may hit the pause button on monetary tightening this year.

Fed Chairman Jerome Powell reiterated on Thursday the U.S. central bank has the ability to be patient on monetary policy given that inflation remains stable. Markets are now pricing in no further rate hikes by the Fed this year.

“The market has almost priced in that the Fed will not be hiking rates any further. To get the dollar weaker, market now has to expect a rate cut…I don’t see that happening,” said Sim Moh Siong, currency strategist at Bank of Singapore.

Sentiment was still slightly cautious in Asian trade on a lack of concrete details from the United States and China on any progress in their trade dispute after a three-day meeting in Beijing. The two sides are more than halfway through a 90-day truce agreed by U.S. President Donald Trump and his Chinese counterpart Xi Jinping.

Traders still remain optimistic that a trade deal between the world’s largest economies will eventually materialize. U.S. Treasury Secretary Steven Mnuchin said late on Thursday that Chinese Vice Premier Liu He will “most likely” visit Washington later in January for trade talks.

Bank of Singapore’s Sim added that currencies such as the Australian dollar, a gauge of risk appetite, and the New Zealand dollar, are likely to see further gains if a U.S.-Sino trade deal is reached.

The Aussie dollar was last at $0.7201, gaining 0.2 percent versus the greenback, while the kiwi firmed 0.44 percent to $0.6808.

The dollar also fell 0.47 percent versus the offshore yuan to 6.7602. The yuan is now at its strongest since late July last year.

The dollar index fell by 0.17 percent to 95.37. The index has fallen around 2.2 percent since mid-December on expectations that a slowdown in growth, both in the United States as well as globally, will restrict the Fed from raising rates in 2019.

In 2018, the greenback outperformed its peers, gaining 4.3 percent as the Fed hiked rates four times on the back of a strong domestic economy, falling unemployment and rising wage pressures. This has caused traders to turn bearish on the dollar.

However, few analysts still forecast a rising dollar for this year.

“The Fed Funds Rate is no longer accommodative but neutral, and more importantly, positive in real terms. In line with a more patient Fed, the U.S. dollar’ rise will become gentler,” said Philip Wee, currency strategist at DBS in a note.

The euro gained 0.2 percent to $1.1519, after losing 0.4 percent of its value in the previous session. The single currency has been pressured by a slew of weaker-than-expected economic data, especially from France and Germany.

The European Central Bank is widely expected to remain accommodative in 2019, which should keep a lid on the single currency.

Elsewhere, sterling traded marginally firmer, fetching $1.2752 in early Asian trade with traders focused on the progress of Brexit.

British Prime Minister Theresa May must win a vote in parliament to get her Brexit deal approved or risk seeing Britain’s exit from the European Union descend into chaos. The vote is now due to take place on Jan. 15. The numbers are not in May’s favor and her chances of winning the vote look extremely slim.

The dollar weakened versus the Canadian dollar by 0.17 percent to C$1.3211. The greenback has lost 3.25 percent against the loonie over the last six sessions, with the commodity-linked currency bolstered by a rebound in oil prices.

Gold steadied near a more than six-month peak on Thursday as the dollar’s slight recovery offset concerns about economic growth after U.S.-China talks failed to provide clarity on efforts to end their trade dispute. Spot gold was little changed at $1,293.11 per ounce as of 7:20 a.m. ET, hovering near last week’s peak of $1,298.42 – a level last seen in the middle of June. Also indicating investor interest in gold, holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust,

Gold steadied near a more than six-month peak on Thursday as the dollar’s slight recovery offset concerns about economic growth after U.S.-China talks failed to provide clarity on efforts to end their trade dispute.

Spot gold was little changed at $1,293.11 per ounce as of 7:20 a.m. ET, hovering near last week’s peak of $1,298.42 – a level last seen in the middle of June.

U.S. gold futures gained 0.15 percent to $1,293.90 per ounce.

“Gold has a certain underlined resilience, which suggests a significant portion of investors remain apprehensive to the macroeconomic backdrop and so they want to use gold as an insurance,” said Capital Economics analyst Ross Strachan.

Concerns to economic growth continue to remain in the market with data showing that China’s consumer prices and factory-gate inflation both increased less than expected in December, while economic data in the euro zone has remained consistently weaker than forecasts over the last few months.

“So far this week, prices have failed to fall below $1,277 and are now trying to attack again the $1,300 level. If they manage to reach this threshold, there would be space for further rallies,” ActivTrades chief analyst Carlo Alberto De Casa said in a note.

Also indicating investor interest in gold, holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.3 percent on Wednesday, to their highest level since late July.

But limiting gold’s gains was firmer dollar, which gained against a basket of six other major currencies, having fallen to a near three-month low earlier in the session.

“The dollar is performing very strongly in sterling terms and gold has an overhead resistance up above the $1,300 level,” said Ross Norman, chief executive at Sharps Pixley. “Gold at the moment seems to struggle with anything that resembles a technical resistance.”

In other metals, palladium fell about 0.75 percent to $1,316.49 per ounce, after scaling an all-time high of $1,342.43 in the previous session.

“There is always a potential for some profit-taking in palladium,” Strachan said.

“With the fact that reports on the trade front were a bit further away from an agreement than what appeared to be the case this time yesterday, a little bit of the froth in palladium prices is being removed.”

Delegations from China and the United States ended three days of trade talks in Beijing on Wednesday, but there were few concrete details on the U.S. meetings, which were not at a ministerial level, so were not expected to produce a deal to end the trade war.

Silver was down 0.33 percent at $15.69 per ounce, while platinum inched up 0.21 percent to $826.40.

The euro surged to a high of $1.1581 overnight, its highest level since mid-October before trimming some of its gains and settling at $1.153, broadly steady on the day. The surge in the euro took some traders by surprise who had added some big stop losses around the $1.15 levels, forcing them to unwind their positions and prompting further euro gains. That has lifted China’s offshore yuan to its highest level since August along with recent assurances from Beijing of further fiscal boosts to the

The euro consolidated gains on Thursday after posting its biggest daily jump in more than six months, having cleared some key market levels after Fed minutes signaled a more cautious approach towards further rate hikes.

With the euro broadly hemmed in a $1.12-$1.15 range over the last three months, the dovish minutes gave dollar bears a further excuse to buy the euro, propelling it past a 100-day moving average, a level it hasn’t traded above in more than three months.

The euro surged to a high of $1.1581 overnight, its highest level since mid-October before trimming some of its gains and settling at $1.153, broadly steady on the day.

“This is more of a dollar bearish story causing some stop losses to be triggered around key levels rather than a rerating of the European story,” said Kamal Sharma, director of G10 FX strategy at Bank of America Merrill Lynch in London.

The surge in the euro took some traders by surprise who had added some big stop losses around the $1.15 levels, forcing them to unwind their positions and prompting further euro gains. Data out of Europe has been fairly tepid. French industrial production fell more than expected in November while Swedish private sector production data was fairly flat.

Minutes from the Fed’s Dec. 18-19 meeting showed that several policymakers were in favour of the U.S. central bank keeping rates steady this year.

“This drop in the dollar is an overdue correction following a surprisingly robust few weeks despite the massive collapse in U.S. rate expectations,” said Ulrich Leuchtmann, a currency strategist at Commerzbank.

China and the United States have extended trade talks in Beijing, boosting oil prices and broader sentiment.

That has lifted China’s offshore yuan to its highest level since August along with recent assurances from Beijing of further fiscal boosts to the slowing economy.

The yuan has breached the key 6.8 per dollar level in both onshore and offshore trade.

Commodity currencies such as the Canadian dollar have been the biggest beneficiaries of improving risk sentiment this week. It fetched C$1.3230, hovering close to its highest level in more than a month, helped by the rebound in oil prices.

The dollar index rose .09 percent at 95.30, after losing 0.7 percent on Wednesday. It has weakened in four out of the last five sessions as traders wager that US interest rates will stay steady in 2019.

Gold prices fell on Tuesday as risk appetite improved on bets China and the United States may be closing on a trade deal, and as the dollar bounced off a 2-1/2-month low hit in the previous session. Spot gold was down 0.5 percent at $1,282.70, as of 0516 GMT, while U.S. gold futures were 0.5 percent lower at $1,283.50 per ounce. A weaker dollar makes dollar-denominated gold more affordable for buyers using other currencies. Gold prices have gained about 11 percent since hitting a more than 1-1/2

Gold prices fell on Tuesday as risk appetite improved on bets China and the United States may be closing on a trade deal, and as the dollar bounced off a 2-1/2-month low hit in the previous session.

Spot gold was down 0.5 percent at $1,282.70, as of 0516 GMT, while U.S. gold futures were 0.5 percent lower at $1,283.50 per ounce.

“Because of improved investor sentiment, gold is coming off its highs and may have to stay around the current levels,” said Mark To, head of research at Wing Fung Precious Metals in Hong Kong.

“The market has been troubled by uncertainties around trade war and interest rate hikes. However, now most of the stake holders, including the authorities in U.S., China and Fed, are trying to cooperate and put up a positive tone and create a stable environment for investors.”

Most Asian shares were propped up on Tuesday by hopes that Washington and Beijing may be inching towards a trade deal after positive comments from U.S. Commerce Secretary Wilbur Ross.

“A lot of people had gone long in gold as they bet that economic growth in U.S. and China might slow down due to the trade war,” said Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai.

“If there are positive outcomes (in the trade talk) there could be some profit taking (in gold).”

The dollar index was up 0.3 percent, moving away from a 2-1/2-month low hit in the previous session after U.S. Federal Reserve chief Jerome Powell hinted on Friday that the central bank could pause its multi-year rate-hike cycle.

Gold is declining as the dollar is showing early signs of shaking off its recent bout of Fed-induced weakness, said Stephen Innes, APAC trading head at OANDA.

A weaker dollar makes dollar-denominated gold more affordable for buyers using other currencies.

Gold prices have gained about 11 percent since hitting a more than 1-1/2-year low in mid-August due to tumultuous stock markets and a slightly weaker dollar. Bullion prices hit their highest since June 2018 at $1,298.42 on Friday.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, saw a bit of outflows on Friday. But, holdings are still at their highest since August 2018, underpinning demand for the safe-haven metal.

Palladium, meanwhile, rose 0.1 percent to $1,301 an ounce, but was still in the vicinity of the record high of $1,313.24 hit in the previous session. The metal was trading at a premium to gold.

Silver edged 0.6 percent lower to $15.55 per ounce, while platinum fell 0.8 percent to $815.50, having hit its highest in more than a month at $831.10 on Monday.

Powell’s colleague Raphael Bostic, the Atlanta Fed President, added to the central bank’s dovish tone on Monday. “The Fed is listening to the market and has acknowledged flashing market signs,” said Sim Moh Siong, currency strategist at Bank of Singapore. “U.S. inflation has been well behaved so far and so the Fed does have room to pause on its rate hike cycle,” added Sim. The dollar had gained 4.3 percent in 2018 as the Fed hiked rates four times on the back of a strong domestic economy, fallin

The dollar struggled for traction against its peers on Tuesday, with investors increasingly convinced the Federal Reserve will not raise interest rates this year amid risks of a sharper slowdown in global growth.

The greenback was marginally firmer against the yen, after falling 0.2 percent earlier in the session as traders wagered that the monetary tightening cycle in the world’s largest economy has been halted for the year.

On Friday, Fed Chairman Jerome Powell told the American Economic Association the Fed is not on a preset path of rate hikes and it will be sensitive to the downside risks markets are pricing in.

Powell’s colleague Raphael Bostic, the Atlanta Fed President, added to the central bank’s dovish tone on Monday. Bostic, who is not a voting member of the Federal Open Market Committee this year, said the Fed may only need to raise rates once in 2019.

“The Fed is listening to the market and has acknowledged flashing market signs,” said Sim Moh Siong, currency strategist at Bank of Singapore.

“U.S. inflation has been well behaved so far and so the Fed does have room to pause on its rate hike cycle,” added Sim.

The dollar index was marginally higher, fetching 95.80 at 0244 GMT. Earlier in the session, it had hit an intra-day low of 95.68.

The index has lost around 2 percent since mid-December, and has followed a decline in U.S. bond yields as market participants have grown increasingly confident that the Fed will not hike rates in 2019.

The dollar had gained 4.3 percent in 2018 as the Fed hiked rates four times on the back of a strong domestic economy, falling unemployment and rising wage pressures.

But market expectations for further Fed tightening this year have shifted markedly in the last few months, with some traders now expecting even a rate cut this year.

Financial markets have been rattled by heightened worries about slowing global growth, especially in the United States and China, though data on Friday showed strong U.S. job growth.

Expectations of no further rate hikes this year are likely to keep the greenback under pressure.

The euro was down 0.2 percent at $1.1448, after touching an intra-day high of $1.1485. The single currency has gained around 1.3 percent over the last three trading sessions as the outlook towards the greenback weakened.

The euro’s recent strength has surprised some analysts as growth and inflation remain weak in the eurozone, well below European Central Bank forecasts.

“Having consolidated in a 200-pip range for a large part of the past 2 months, the pair is prime for a breakout,” said Kathy Lien, managing director of currency strategy at BKX Asset Management in a note.

The British pound changed hands at $1.2787, relatively unchanged from its previous close. Traders expect sterling to remain volatile over the next few weeks due to Brexit woes.

Britain’s Prime Minister Theresa May must win a vote in parliament to get her Brexit deal approved or risk seeing Britain’s exit from the European Union descend into chaos. The vote is now due to take place the week beginning Jan. 14.

May’s chances of winning the vote look slim as the DUP, the small Northern Irish party that usually props up her government, is opposed to the deal.

Elsewhere, the Australian dollar was lower by 0.15 percent at $0.7136. Despite its weakness on Tuesday, traders remain positive on the Aussie dollar over the short term.

Sentiment has been buoyed by aggressive stimulus measures in China, Australia’s largest importer of commodities, and also improved prospects for a U.S.-China trade deal.

U.S. Commerce Secretary Wilbur Ross predicted on Monday that Beijing and Washington could reach a trade deal that “we could live with”.

The safe-haven yen weakened versus the dollar on Friday on hopes upcoming U.S.-China trade talks would make some progress, but broader market confidence remained weak amid worries over slowing global growth. Market sentiment perked up after China confirmed that trade talks with the United States will be held at the vice ministerial level in Beijing on Jan. 7-8. The yen weakened 0.5 percent to 108.18 while riskier currencies such as the Australian dollar gained 0.2 percent to $0.7020. The Fed rai

The safe-haven yen weakened versus the dollar on Friday on hopes upcoming U.S.-China trade talks would make some progress, but broader market confidence remained weak amid worries over slowing global growth.

Market sentiment perked up after China confirmed that trade talks with the United States will be held at the vice ministerial level in Beijing on Jan. 7-8. Trade tensions between the world’s two largest economies had rattled financial markets for most of 2018.

The yen weakened 0.5 percent to 108.18 while riskier currencies such as the Australian dollar gained 0.2 percent to $0.7020.

“Sentiment has shifted slightly towards the positive side, which is why we are seeing the yen weaken while Aussie dollar is rising,” said Margaret Yang, markets analyst at CMC Markets.

However, fears of a sharp slowdown in economic growth and a failure of the trade talks are likely to keep investors from diving back into riskier assets in a big way in the coming weeks.

Weaker-than-expected U.S. factory activity has heightened investor expectations the Federal Reserve will not raise rates in 2019, and possibly even cut them in 2020. Data has also been weak out of China and Europe.

Spooked by signs of fresh troubles in the world’s largest economy, investors rushed to the safety of bonds. The U.S. two-year Treasury note yield dropped below 2.4 percent on Thursday, reaching parity with the federal funds effective rate for the first time since 2008.

The Fed raised rates four times in 2018 on the back of strong growth and a robust labour market. However, with financial conditions tightening, most analysts now do not expect the Fed to raise rates in 2019.

Indeed, interest rate futures markets are now fully pricing in a rate cut by April next year.

In an interview with Bloomberg on Thursday, Dallas Fed President Robert Kaplan acknowledged issues such as the deceleration of global growth, tightening of financial conditions and widening credit spreads.

“My own view is we shouldn’t take any further action on interest rates until these issues are resolved for better or for worse…,” Kaplan said.

“So I would be an advocate of taking no action during the first couple of quarters of this year…we should be patient and give some time for this economy and watch how this situation unfolds.”

A dovish Fed would likely keep the greenback under pressure in the coming months, giving central banks in emerging markets room to cut rates if economic conditions sharply deteriorate.

“A weaker dollar should benefit emerging market currencies, but for now they are hamstrung by all the uncertainty around China,” said Ray Attrill, head of currency strategy at NAB.

The dollar index was relatively unchanged at 96.3. The index fell 0.56 percent in the previous session.

The euro and sterling were unchanged from Thursday’s close at $1.1393 and $1.2636, respectively.

Gold prices scaled a more than six-month peak on Thursday as worries about a global economic slowdown and volatility in equities boosted safe-haven buying, while a weaker dollar offered support. Spot gold touched its highest since June 15 at $1,292.32 per ounce, and was up 0.4 percent at $1,289.10 at 0819 GMT. “The weaker dollar lent some support for gold. The Japanese yen, also a preferred asset during times of economic volatility, surged versus the U.S. currency on Thursday. Investor appetite

Gold prices scaled a more than six-month peak on Thursday as worries about a global economic slowdown and volatility in equities boosted safe-haven buying, while a weaker dollar offered support.

Spot gold touched its highest since June 15 at $1,292.32 per ounce, and was up 0.4 percent at $1,289.10 at 0819 GMT.

U.S. gold futures were up 0.6 percent at $1,291.20 per ounce.

“The weaker dollar lent some support for gold. People are more interested in gold as the stock markets are under pressure and are looking at gold as a safe haven,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

The dollar index fell over 0.2 percent. The Japanese yen, also a preferred asset during times of economic volatility, surged versus the U.S. currency on Thursday.

The market is also awaiting a closely-watched survey on U.S. manufacturing due on Thursday, followed by the December payrolls report on Friday.

Meanwhile, the Australian dollar-denominated gold hit a record high on Thursday at A$1,894.02 after the currency, often considered a gauge of global risk appetite, fell to its lowest level since 2009 in early Asian trade.

Gold pushed higher as investors looked for a safe-haven due to brutal moves in the Australian dollar, MKS PAMP Group traders said in a note.

“Australian producers were slow to realise the move but have since been seen consistently selling, taking advantage of the very bullish move.”

Investor appetite for gold has reflected in the rise of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund. SPDR holdings rose about 1 percent to 795.31 tonnes on Wednesday.

Among other precious metals, palladium gained 0.9 percent to $1,265.74 per ounce.

Silver was up about 0.5 percent at $15.58 an ounce, while platinum rose 0.3 percent to $796.60 per ounce.

The yen surged across the board, reserving some of its biggest gains against the traditional high-yielding currencies favoured by domestic retail investors such as the Australian dollar and the Turkish lira. The dollar collapsed to as low as 104.10 yen, an eye-watering drop of 4.4 percent from the opening level of 108.87 and the lowest reading since March 2018. It was last trading around 107.54 yen, down 1.2 percent on the day and poised for the biggest daily fall since November 2016. The yen’s

The yen rocketed higher on Thursday and is poised for its biggest daily rise in 20 months as growing concerns about the health of the global economy, particularly China, sent investors scurrying into the safe-haven of the Japanese currency.

The yen surged across the board, reserving some of its biggest gains against the traditional high-yielding currencies favoured by domestic retail investors such as the Australian dollar and the Turkish lira.

The break of some key technical levels in early Asian trading on Thursday triggered some massive stop-loss sales, forcing investors to unwind some of their large short yen trades against the dollar and quickly cascading into other currencies.

The dollar collapsed to as low as 104.10 yen, an eye-watering drop of 4.4 percent from the opening level of 108.87 and the lowest reading since March 2018.

It was last trading around 107.54 yen, down 1.2 percent on the day and poised for the biggest daily fall since November 2016. At session lows, it has fallen more than 6.5 percent in the last five trading sessions.

While the early slide was triggered by news of a rare cut in sales forecast by Apple in its latest quarter, citing slowing iPhone sales in China, the selling quickly gathered momentum in illiquid markets, with Japan still on holiday after the New Year.

“The sharp drop in risk sentiment fueled by weaker PMI data in China and Europe and Apple’s warning has contributed to the sharp overnight move in the yen,” said Valentin Marinov, head of G10 FX research at Credit Agricole based in London.

The yen’s surge against the dollar also pushed it higher against other major rivals such as the pound and the euro against which it rose 1.8 percent and 0.9 percent respectively.

Market watchers say the yen’s surge may have further room to run as Japanese investors have made a beeline for overseas assets, particularly U.S. equities, in recent months on an unhedged basis and the yen rise would force them to cover some of their short positions.

Elsewhere, the dollar was down 0.3 percent against a basket of its rivals at 96.56 while the euro rose 0.3 percent to $1.1372.

The yen gained 0.3 percent against the dollar to 109.39 in Asian trade. The yen has strengthened for three straight weeks on investors’ lower appetite for risk. Traders expect the single currency to remain under pressure as both growth and inflation in the eurozone remain below the European Central Bank’s expectations. The euro lost 4.4 percent of its value versus the dollar in 2018. Commodity currencies such as the Canadian dollar weakened as oil prices fell on fears of slowing global demand.

Safe-haven currencies such as the yen rose against the dollar on Wednesday, as a cautious mood prevailed on the first trading day of the year on concerns over global growth, the U.S. government shutdown and a slower pace of Federal Reserve rate hikes.

The yen gained 0.3 percent against the dollar to 109.39 in Asian trade. Trading volumes remained light as global markets reopened after the New Year’s Day holiday. Japanese markets remain closed on Wednesday.

The yen has strengthened for three straight weeks on investors’ lower appetite for risk.

“It’s still difficult to be strongly positive given all the uncertainties. Hopefully, there will be progress on trade talks but the market is cautious and that’s benefiting the safe havens such as the yen,” said Sim Moh Siong, currency strategist at Bank of Singapore.

Fears of a global slowdown were aggravated on Wednesday by a survey showing China’s factory activity contracted for the first time in 19 months in December as domestic and export orders continued to weaken.

With business conditions expected to get worse before they get better, China is expected to roll out more support measures in coming months on top of a raft of initiatives in 2018.

“This data confirms our view that the economy is weak and that stimulus needs to arrive quickly,” said analysts at ING in a note.

ING expects the Chinese government to speed up the delivery of infrastructure investment to support the economy, which will mainly be through projects governed by local governments.

The Australian dollar, whose fortunes largely depend on the Chinese economy to which Australia sends a bulk of its commodities, fell 0.5 percent to $0.7016.

The dollar gained 0.05 percent versus the offshore yuan at 6.8681.

While market participants remain concerned about the broader investment outlook, renewed hopes for a resolution to the U.S.-Sino trade dispute have provided some cause for optimism. On Sunday, U.S. President Donald Trump indicated that progress had been made toward a potential settlement of trade tensions which had plagued stock markets for much of 2018.

On Wednesday, the dollar index was relatively unchanged from Monday’s close, fetching 96.17.

Rising interest rates drove the dollar’s outperformance in 2018 with the Fed raising rates four times over the year, as unemployment remained at historically low levels and wage pressures rose.

However, the dollar has been under pressure in recent weeks as investors grow increasingly nervous about a slowdown in the U.S. economy and peak corporate earnings growth.

The U.S. 10-year Treasury yield fell by around 35 basis points over December to 2.69 percent as bond traders bet that the Fed would not be able to raise rates in 2019 due to slowing economic momentum.

The euro slipped 0.16 percent to $1.1446. Traders expect the single currency to remain under pressure as both growth and inflation in the eurozone remain below the European Central Bank’s expectations. The euro lost 4.4 percent of its value versus the dollar in 2018.

Elsewhere, sterling weakened by 0.15 percent to $1.2728. The British pound lost 5.5 percent versus the greenback last year due to Brexit woes.

With three months until the United Kingdom is due to leave the European Union, British Prime Minister Theresa May’s Brexit deal is floundering and traders expect sterling to remain under pressure.

Commodity currencies such as the Canadian dollar weakened as oil prices fell on fears of slowing global demand. The dollar gained 0.07 percent versus the loonie to C$1.3647.